Although the Canada Revenue Agency (CRA) is not likely to start devoting as many resources to finding unreported offshore income as its counterpart in the U.S., it is clear that the issue has recently become a greater priority north of the border, says Toronto tax litigation lawyer David J. Rotfleisch.
As the Financial Post reports, a recent U.S. Senate report on Credit Suisse AG claims that the bank “enabled more than 20,000 Americans to evade billions of dollars of tax,” and it also included evidence of the bank’s strategies for dealing with Canadian clients.
While the CRA could not comment on the U.S. Senate claims, says the article, it notes that, over the last number of years, the agency has also received details of thousands of unreported offshore accounts at Credit Suisse and other banks. A case between the CRA and Credit Suisse, requesting the release of the bank’s records on Canadian clients, is still before the courts, says the Financial Post.
“It is clear that the era of offshore secret bank accounts is coming to an end. Even if the CRA loses this court battle I think that they will continue to go after the names of offshore accounts held by Canadians, just as the IRS and some European countries have,” says Rotfleisch, founding lawyer at Rotfleisch & Samulovitch Professional Corporation, a boutique tax and business law firm specializing in tax dispute resolution.
While there is currently no indication that the CRA will become as proactive as the IRS on this issue, says Rotfleisch, it is clear that the Canadian tax authority is now moving the issue up in priority.
“The CRA is being more low key than the IRS, but is still going after Canadians with unreported offshore income or unreported offshore assets,” he says.
“Canadians with unreported offshore income or assets who have not been approached by the CRA can still submit a voluntary disclosure application to avoid prosecution and penalties and obtain a possible interest reduction. Those who don't and are caught are subject to prosecution including jail time,” he adds.
Disclaimer:
"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."